Opening a coffee shop startup can be a daunting but fulfilling and lucrative task. There are many aspects to building your own coffee shop startup. From finding the right location, creating the perfect menu, getting the right equipment, and doing interior design work, those looking to open their own startup must take on several tasks in order to successfully open up shop.
However, there seems to be one aspect of starting a coffee shop that scares away many budding entrepreneurs—legal requirements. This can often feel like an overwhelming task and many times if you try and do some independent research, you’re usually left with more questions than answers.
Regardless, if you’re reading this article then you probably know, or at least have a vague idea, that you need some sort of business license in order to legally run your coffee shop startup. In this article we’re going to explain exactly how to get your coffee shop business license as well go over a couple other licenses that you’ll most likely need for your shop.
**Disclaimer** We do not address every single license that you might need in order to open a startup coffee shop. We just hit the main ones. It might be a good idea to consult with a business law attorney to make sure that you have all the licenses and permits necessary to legally open your own shop.
How to Get Your Business License
First find out where to get your business license. To do this simply google your city’s name along with the phrase “business license” and this should help you find which department in your city deals with issuing business licenses.
After that simply follow the application procedures that are laid out on your state government’s website or go to your city hall and pick an application up in person.
It should be noted that you have to pay a filing fee to obtain your license and the cost varies depending on which state you do business in. You can expect to pay a registration fee of around $50 and a filling fee anywhere from $25 to $500.
Also check out the U.S Small Business Administration’s website for more on business location, structure, and registration.
Foodservice License
A foodservice license is a permit required for any business that serves food or beverages prepared on-site. Foodservice licenses are issued by your city’s health department, which means they’ll also vary by location.
This is the license that requires the nerve-wracking in-person visit from a health department official. During these inspections, the health inspector will meticulously check food preparation as well as holding and storage temperatures of all meat, poultry, seafood, and ready-made food products to ensure that they are at safe temperatures.
The process for getting a foodservice license is fairly simple: apply online with the name and location of your restaurant. Foodservice license fees are often based on size and location of the restaurant, but it can also be based on the number of employees as well. On average, foodservice license fees cost anywhere from $100 to $1000.
It’s important that you get an appointment with the health department before opening your shop or else you could be subjected to heavy fines or even completely shut down.
Employee Identification Number
An Employee Identification Number is a unique nine-digit number and federal tax id number that is assigned to business entities (by the IRS) operating in the United States for the purposes of identification. It’s sort of like a social security number for your business.
Just as social security numbers are used to track an individual’s earnings and years of work an employee identification number is used by the IRS to identify taxpayers that are required to file various business tax returns.
A business needs an employee identification number in order to pay employees and to file business tax returns. Further, to be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc. a business must obtain an employee identification number.
It’s safe to say that EINs are pretty important.
Fun fact: These are free and last a lifetime; the only catch is that the IRS only issues each person one EIN per day, so if you have multiple business you can’t get an EIN for all of them at the same time.
Food Handler’s Permit
A food handler’s permit is another one of the licenses that you need to legally open a coffee shop. A food handler’s permit is a permit or card that your employees must obtain in order to work at your shop. Employees in training must take a food handler’s course that teaches them how to hygienically handle food and prevent food borne illnesses.
This permit guarantees that your restaurant meets food sanitation, storage, protection, and preparation regulations.
Inspectors routinely visit coffee shops and other restaurants to ensure that they have valid permits and are always practicing safe food preparation methods. If you get caught without the proper permits then your shop will can be written up, fined, or even completely shut down.
However, there is some variance in the rules between states when it comes to a food handler’s permit. Every state requires that you have at least one employee who is a certified food handler on site at all times. But some states like Texas requires all employees who work with “unpackaged food, food equipment or utensils, or food-contact surfaces” to complete food handler training.
If you are located in a state where it’s not required that every employee must be a certified food handler then you the owner or another manager would be a good candidate for a food handler as at least one of you is usually on site.
Regardless it is important that you make sure that all your employees understand and practice safe food preparations so that you can preserve the longevity of your business.
To get a food handler’s permit you can take the ServSafe’s Food Handler course which is accepted across all 50 states. Just make sure that you pass the exam with a 75 or above.
Sign Permit
This one is pretty self-explanatory, but essentially if you want to put up any type of signage that advertises your coffee shop, you’re going to need a permit for it. As far as sizing, cost, and location go, that’s all determined by your city.
As most coffee shops rely on drive-by or walk-by traffic to attract customers, we advise you not to overlook this one—it could become the most important element of your brand.
If you’re still deciding on your sign, check out this article for some helpful information.
Frequently Asked Questions
Unfortunately, no. business licenses are required to be renewed annually. Forgetting to renew a business license is a common problem among entrepreneurs and we completely understand that. You’ve got a hundred different things to get done so it’s easy to put off renewing your license.
To combat this problem we advise that you put a reminder on your phone, a mark on your calendar, pin the deadlines onto your back office wall, and do anything else necessary to stay on top of it and not forget.
A business license, while it may seem small once you get your coffee shop startup up and rolling, is a foundational piece of your business and without it you could run into some serious legal trouble such as having your business completely shut down.
Well we’re glad you asked! Like we said earlier, most coffee shops rely on drive-by and walk-by traffic to generate sales. The best way to channel that traffic to your shop is by having some type of advertisement that potential customers can see easily.
The best way to accomplish this is by having a giant sign above your store, and—if you’ve got enough money and the right location—another sign that’s fairly close to your shop and large enough to channel traffic.
To run a successful coffee shop startup your sign needs to accomplish two crucial things. First, it needs to attract attention. According to the Council Post Americans are exposed to around 4,000 to 10,000 advertisements per day.
We’re not saying that your sign needs to be the number one sign that people remember, it doesn’t even need to be in the top ten. But your sign does need to stand out enough to grab people’s attention. After that, your shop’s atmosphere, customer service, and products need to be able to keep them.
The second thing that your sign needs to accomplish is that it needs to be easy to read from a distance. In today’s day and age people prefer quick, to-the-point, and readable content over long-winded explanations. The same goes for advertisements.
Potential customers shouldn’t have search your sign like a detective to figure out what your company is. They should be able to take one look at your sign and go “Oh that’s a coffee shop!”.
Therefore, a good sign is very important to your business because it can be the main factor when directing customer traffic to your coffee shop.
To learn more on how to start your own coffee shop checkout my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!
Shawn
